The Melbourne residential vacancy rate edged up from 2.7% to 2.8% over October while nationally the vacancy rate was virtually unchanged at 1.8%, with a small dip in houses and units available to rent, according to SQM Research.
In total SQM Research counted 49,104 properties available to rent in October, down from 49,664 in September, but well up on the fewer than 46,000 available to rent a year ago.
Of these 49,104 rental properties, nearly a quarter are in Melbourne (12,037).Click to enlarge
The Sydney vacancy rate declined from 1.7% to 1.6% over October, with 8,851 vacancies recorded.
Perth recorded the tightest vacancy rate of the capital cities, unchanged at 0.6%, with a total of 1,025 vacancies.
Darwin recorded the most substantial monthly increase, rising 0.2% to 0.7% during the month of October 2012 and coming to a total of 171 vacancies while Hobart recorded the largest monthly decrease in vacancies, falling by 0.3% since September 2012.
SQM Research managing director Louis Christopher tells Property Observer that based on seasonality factors, he expects the Melbourne vacancy rate to go over 3% over Christmas, but then dip below 3% in January as landlords pull their listings, before rising again above 3% in March, April and May and remaining at elevated levels until the construction cycle peaks in late 2013.
“It’s been hovering around that level for that now and it would not take much for it to go over 3%,” he says.
A 3% vacancy rate is the point at which a market is set to be evenly balance between landlords and renters. Above 3% and renters have greater power to negotiate cheaper rents and the market looks less enticing to property investors.
Christopher says the main issue for Melbourne is one of supply.
“There is a lot of new supply coming on in Melbourne, demand will lift, but there is still ample supply of existing stock with new stock coming on board as well.
“Overall our national vacancy rates series continues to record a tight market, particularly with regard to Perth and Darwin, which are not showing any signs of been hurt by current concerns about the resources cycle,” says Christopher.
SQM’s calculations of vacancies are based on online rental listings that have been advertised for three weeks or more compared with the total number of established rental properties.